Public Company Ratio Analysis
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Financial Ratios Sample Report - Click here to view Sample Report
Your report is generated while online:
|5 most recent years of financial results, including latest filed quarter, taken from the Securities and Exchange Commission (SEC) database|
|Includes 28 of the most useful financial ratios|
|Sustainable Growth Rate prediction|
|Altman Z-Score potential for bankruptcy prediction|
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In assessing the significance of various financial data, experts engage in financial analysis, the process of determining and evaluating financial ratios. A ratio is a relationship that indicates something about a company's activities, such as the ratio between the company's current assets and current liabilities or between its accounts receivable and its annual sales. The basic source for these ratios is the company's financial statements that contain figures on assets, liabilities, profits, and losses. Ratios are only meaningful when compared with other financial information. Since they are most often compared with industry data, ratios help an individual understand a company's performance relative to that of competitors and are often used to trace performance over time.
Financial analysis can reveal much about a company and its operations. However, there are several points to keep in mind about ratios. First, a ratio is a "flag" indicating areas of strength or weakness. One or even several ratios might be misleading, but when combined with other knowledge of a company's management and economic circumstances, financial analysis can tell much about a corporation. Second, there is no single correct value for a ratio. The observation that the value of a particular ratio is too high, too low, or just right depends on the perspective of the analyst and on the company's competitive strategy. Third, financial ratios are meaningful only when compared with some standard, such as an industry trend, ratio trend, a trend for the specific company being analyzed, or a stated management objective.
In trend analysis, financial ratios are compared over time, typically years. Year-to-year comparisons can highlight trends and point up the need for action. Trend analysis works best with five years of ratios.
The second type of ratio analysis, cross-sectional analysis, compares the ratios of two or more companies in similar lines of business. Highly recommended by VentureLine is one of the most popular forms of cross-sectional analysis: comparing a company's financial ratios to the industry in which the company competes.
The report is broken down into the various categories:
- Predictor Ratios indicate the potential for growth or failure.
- Profitability Ratios which use margin analysis and show the return on sales and capital employed.
- Asset Management Ratios which use turnover measures to show how efficient a company is in its operations and use of assets.
- Liquidity Ratios which give a picture of a company's short cash-flow situation or solvency.
- Debt Management Ratios which show the extent that debt is used in a company's capital structure.
VentureLine is your source for online financial ratio analysis.